Summary
In this case, which turned on the construction of a strikes clause in a voyage
charterparty, the court held that, in order to except from demurrage delay
caused by a strike by consignee’s employees, the charterers had to show, not
only that the strike caused the delay, but also that it was beyond the control
of the consignee. This they were unable to do, with the result that the owners
succeeded in their claim for demurrage.

DMC Category Rating: Confirmed

This case note is based on an Article in the February 2005
Edition of the ‘Bulletin’, published by the Marine and Insurance teams at
the international firm of lawyers, DLA Piper Rudnick
Gray Cary. DLA Piper is an International Contributor to this website.

Background
On 9 October 2001, Swissmarine chartered the vessel Cape Equinox to
Frontier International for a voyage from Australia to Mexico. The vessel arrived
at the discharge port on 12 December 2001 and discharge began on 13 December. On
17 December, employees of the consignee went on strike and this did not end
until 16 January 2002. Discharge was completed the following day.

The voyage charterparty was in the Americanised Welsh Coal
Charter Form (amended 1979). Under clause 4, liability for demurrage at the
loadport was expressed to be that of the charterers whereas, under clause 9,
liability at the discharge port was that of the consignee. If discharge was
delayed beyond the allotted time, the consignee would pay demurrage at $10,500
per day, but "in case of strikes, lockouts, civil commotions, or any
other causes or accidents beyond the control of the consignee which prevent or
delay the discharging, such time is not to count unless the vessel is already on
demurrage …".

Under clause 26, charterers' liability ceased as soon as the
cargo was shipped, except for "all other matters provided for in this CP
where Charterers’ liability is specified, and the freight, dead freight and
demurrage in loading/discharging (if any) are paid, the Owner having a lien on
the cargo for freight, demurrage and average". It was accepted that the
effect of the word "discharging" in this clause meant that the
charterers were liable for demurrage at the discharge port as well.

The owners claimed demurrage from the charterers for the delay,
relying on clause 26. The charterers sought to rely on the strikes clause,
arguing that the natural reading of clause 9 was that, in the event of one of
the named causes (such as a strike) preventing or delaying discharge, laytime
would stop, whether or not the cause was beyond the control of the consignee. It
was only in respect of other, unspecified events ("or any other causes
or accidents") that one had to show the cause was beyond the
consignee's control in order to stop time running.

The owners argued that all the specified causes of delay, as
well as the unspecified ones, had to be beyond the control of the consignee.
This strike by the consignee's own employees was not something beyond the
consignee's control.

The dispute went to arbitration, where the arbitrators found in
favour of the owners. In order to rely upon clause 9, the charterers had to
prove, not only that the strike prevented or delayed discharging, but also that
it was beyond the control of the consignee, and this they failed to do. The
tribunal awarded the owners demurrage against the charterers in the sum of
US$236,763. The charterers appealed.

Judgment
The High Court agreed with the arbitrators. The natural construction of
clause 9 was that the words "beyond the control of a consignee"
applied not only to "any other causes or accidents" but also to
the specified events. It made no sense to interrupt the running of laytime for
causes that were within the control of the consignee.

Even though, by the addition of the word "discharge"
to clause 26, charterers were effectively made liable for demurrage at the
discharge port, this did not mean that clause 9 should be construed in a
different way from its natural meaning. The consignee would still arrange and
participate in the work of discharge, so it made sense that the cause of any
delay had to be beyond the consignee's control in order to stop the clock
running. Had the parties wanted to amend clause 9 so that the cause had to be
beyond the charterers', rather than the consignee's control, they could have
done so, but they had not.

The charterers argued that, if this was correct, the strikes
exception would rarely apply because it could always be said that the consignee
could have ended the dispute by giving in to the demands of its workforce. But
this ignored the possibility that the strike causing the delay involved workers
not employed by the consignee, or that it was called for a reason not related to
pay or conditions. It would be a question of fact in each case whether the
strike was beyond the control of the consignee. The judge appreciated that this
meant there would have to be an investigation into the cause of the strike, but
he felt this was unavoidable. The appeal was dismissed.

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